Alden-Rochelle, Inc. v. AMERICAN SOC. OF C., A. AND P.

• Decision Date: 27 October 1948
• Citation: 80 F. Supp. 900
• Parties: ALDEN-ROCHELLE, Inc., et al. v. AMERICAN SOC. OF COMPOSERS, AUTHORS AND PUBLISHERS et al.
• Court: U.S. District Court — Southern District of New York

80 F. Supp. 900

ALDEN-ROCHELLE, Inc., et al. v. AMERICAN SOC. OF COMPOSERS, AUTHORS AND PUBLISHERS et al.

United States District Court S. D. New York.

October 27, 1948.

Weisman, Celler, Quinn, Allan & Spett, of New York City (Milton C. Weisman and Adolph Kaufman, both of New York City, of counsel), for plaintiffs.

Schwartz & Frohlich, of New York City (Robert P. Patterson, Louis D. Frohlich and Ambrose Cram, all of New York City, of counsel), for all defendants except Gustave Schirmer.

Gilbert & Gilbert, of New York City, for defendant Gustave Schirmer.

Hays, St. John, Abramson & Schulman, of New York City (John Schulman, Osmond K. Fraenkel, and William Klein, II, all of New York City, of counsel), for intervenor Milton Ager.

Wattenberg & Wattenberg, of New York City (Sidney Wm. Wattenberg, of New York City, of counsel), for intervenor Chappel & Co. Inc.

Franklin Waldheim, of New York City (Robert J. Rubin and Gunther R. Lessing, both of Los Angeles, Cal., and Kenneth B. Umbreit, of New York City, of counsel), amicus curiae.

LEIBELL, District Judge.

On July 19, 1948 the Court filed findings of fact and conclusions of law together with its opinion in this case. The matter of the settlement of a decree was postponed at the request of ASCAP's attorneys and a hearing date, in the middle of September, was set for a discussion of the form of the decree to be entered The hearing was postponed to the first week in October Meanwhile the attorneys for the defendants served a notice of motion to amend certain findings of fact and conclusions of law, and asked that, if the motion to amend Conclusion of Law XXVII was not granted, the defendants be permitted to present evidence directed solely to the scope of the injunctive relief and based on the contractual relationships and business dealings prevalent between composers, authors and publishers. This opinion presupposes some familiarity with the Court's opinion herein (80 F. Supp. 888) and with the findings and conclusions already filed.

Because ASCAP is an association of composers, authors and publishers, and because the divestiture provisions of Conclusion of Law XXVII subd. (a) might give rise to rival claims of authors and composers on the one hand and of publishers on the other, a representative of the composers, Milton Ager, and a representative of the publishers, Chappel & Co., separately moved for leave to intervene and be heard, solely on the question of the form and scope of the decree. The applications were granted.

The attorneys for the defendant, Gustave Schirmer, join in the general motion of ASCAP's attorneys and have also moved to amend Finding No. 13, so that it will show that Mr. Schirmer was a director, but not a member of ASCAP. There is no objection to the motion to amend Finding No. 13 and it is granted.

ASCAP's motion, in which all the defendants join, asks that Findings of Fact Nos. 31, 50, 55 and 73 be amended. The motion is denied as to Findings Nos. 31, 50 and 55 which are amply supported by the evidence and are necessary in order to present a complete and true picture of ASCAP's activities and some of their effects. Finding No. 73 will be amended to meet some of the criticism of the defendants.

ASCAP's motion also asks that Conclusions of Law Nos. III, XII, XIII, XIV and XXVII(a), (b), (c) and (d) be amended. No objection is made by the defendants to Conclusion XXVII(e). The motion is denied as to Conclusions III, XII, XIII and XIV, and also as to subdivisions (b), (c) and (d) of Conclusion XXVII. An injunctive provision, instead of the divestiture provision, will be substituted in Conclusion XXVII(a).

Conclusions III, XII, XIII, and XIV properly characterize as illegal under the anti-trust laws, ASCAP's Articles of Association, ASCAP's contracts with its members, ASCAP's system of licensing motion picture theatres, the license agreements issued to the theatres by ASCAP, and the manner in which ASCAP's members have used their copyright privileges.

The principal controversy concerns the provisions of Conclusion of Law XXVII which reads in full as follows:

"XXVII. Plaintiffs are entitled to injunctive relief under Title 15 U.S.C. § 26 15 U.S.C.A. § 26, as follows:

"(a) Directing ASCAP to divest itself with all reasonable speed of all rights of public performance for profit through the exhibition of motion picture films, of musical compositions which have been synchronized with motion picture films, and to assign said performance rights to the owners of the copyright of said musical compositions;

"(b) Restraining ASCAP from obtaining the right of public performance of any musical composition synchronized with motion picture films when such musical composition is performed publicly for profit in conjunction with the exhibition of such motion picture films;

"(c) Restraining ASCAP's members from refusing to grant to motion picture producers the right to publicly perform for profit through the exhibition of motion picture film, all musical compositions which they allow motion picture producers to synchronize with motion picture film;

"(d) Restraining ASCAP's members from licensing, except to motion picture producers, the right of public performance for profit through the exhibition of motion picture films, of musical compositions synchronized with motion picture films;

"(e) Restraining ASCAP and its members from conspiring with motion picture producers for the purpose of including a clause in contracts issued by producers to exhibitors directly or indirectly requiring exhibitors to obtain a license from ASCAP as a condition to the exhibition of the licensed pictures."

All five subdivisions of Conclusion XXVII were designed to strike down the means by which ASCAP and its members, in combination with certain motion picture producers, were able to require the motion picture exhibitor (the theatre owner) to obtain a license from ASCAP in order to exhibit the motion picture. The illegal conspiracy was based upon a splitting of the picture synchronization rights of a musical composition from its picture performing rights, so that the producer would be authorized by the ASCAP member who owned the synchronization rights to use the musical composition on the film, but the picture performing rights would remain in ASCAP. The small performing rights of his musical compositions, which included the picture performing rights, were assigned to ASCAP by the composer member under the terms of his membership in ASCAP. The motion picture producer in his rental contract with the theatre exhibitor inserted a clause which in effect required the exhibitor to obtain the picture performing rights of those musical compositions through a license from ASCAP. The motion picture producing corporation was a party to this scheme because it profited therefrom, through the share of ASCAP's revenues which the producing corporation obtained from the membership of its subsidiary music publishing companies in ASCAP. ASCAP had two general classes of members, the composers and authors of the music and lyrics, and the music publishers. The two groups divided equally the entire net income of ASCAP from all sources. A composer member, in addition to what he received from the motion picture producer for the synchronization rights of his musical composition, also shared in the one-half of ASCAP's entire net revenues alloted to the composers and authors. Finding No. 55

To make it impossible for ASCAP, its members and the motion picture producers to continue with this scheme, which was threatening irreparable harm to the 160 motion picture exhibitors who are plaintiffs in this action, it appeared necessary (1) to prevent the splitting of the picture synchronization rights from the picture performing rights of the musical composition copyright; (2) to require that those rights be under one ownership and control; and (3) to require that when the picture synchronization rights of a musical composition are assigned to a motion picture producer, the picture performing rights be also assigned to the producer. By these means, the basis for the paragraph in the film rental contract, and the need for a license from ASCAP, would be removed.

Towards the accomplishment of those objectives, the provisions of subdivisions (b), (c), (d) and (e) of Conclusion of Law XXVII, are essential and are fully justified by the findings of fact and by other conclusions of law in this case. Subdivision (a) of Conclusion of Law XXVII, in its...